Cuomo utility tax extension will sting NY business

Gov. Andrew Cuomo boasts that there’s not one new tax to be found in his proposed budget.

That same plan would wind up heaping $15,000 every month onto the utility bills at the Cameron manufacturing plant in Buffalo, which makes air compressors.

Businesses across New York are supposed to be seeing relief from that utility surcharge. But in his budget, Cuomo calls for keeping the higher taxes alive for five more years—one of a few instances when the governor extends existing taxes to help erase a $1.4 billion deficit.

Those extended taxes are coming to light as the Legislature debates Cuomo’s budget. Republicans in the Senate suggest this is more than a matter of semantics, pointing to the expense Cameron currently pays because of the utility tax.

“It’s an extension beyond the expiration date. It’s a new tax,” said the Senate’s top Republican, Dean Skelos, of Long Island. “It costs us jobs. It goes right to the heart of a business’ bottom line.”

The tax itself is imposed on electric, gas, steam and water companies, and then passed on to consumers.

Facing a record deficit in 2009, then-Gov. David Paterson and the Legislature generated $500 million by raising the tax rate from 0.3 percent to 2 percent.

That rate is supposed to reset to 0.3 percent in early 2014—but Cuomo’s budget sustains the higher tax rate into early 2019, which would continue to bring in about $500 million every year.

The average small business pays $45 more per month because of the utility tax, Republicans said. That’s $540 a year, the GOP said, citing data from National Grid.

“It’s not quite true that there’s no new taxes in this budget,” said E.J. McMahon, founder of the Empire Center for New York State Policy, a conservative think tank in Albany. “It’s disingenuous on [Cuomo’s] part. It’s a very narrow definition.”

Requests for comment from Cuomo’s budget office were not returned.

“The taxpayer’s pocket is not a bottomless piggy bank,” Cuomo said on Jan. 22, when announcing his budget proposal. “We don’t need new taxes. If we did do new taxes, I think we would seriously interrupt the progress we’ve been making.”

At a Feb. 5 press conference, Skelos and business lobbies did not answer how the state would come up with the equivalent amount of money, if they got their way.

“This is something the state can afford. I think we can find this money,” Skelos said.

The state’s new fiscal year starts April 1. Cuomo’s budget must be approved by the Assembly, run by downstate Democrats, and the Senate, controlled by a coalition of Republicans and six breakaway Democrats.